Vientiane: The LSX and EDL-Gen are experiencing a bullish rally not seen for 2 quarters. The index this week gained 68 points from 968.34 to close yesterday at 10338 - a 7.08 percentage gain for the week. It may come as a surprise but the market also gained 68 points a fortnight ago with a 7.36 percent gain on 15 March. It takes time for a rally to emerge but EDL-Gen has fired up the market this month.
Compared to the previous week, the weekly LSX turnover went from US$256.5K to US$606.4K, a significant gain of 57.71 percent. As for the turnover, stronger trading and demand for EDL-Gen saw shares skyrocket up an impressive 123 percent for the week from 426K stocks to 950K of stocks.
EDL-Gen continues to perform strongly this quarter. To illustrate EDL-Gen's recovery, on Sept 6 last year the stock hit its lowest point for 2011 at 4,400 kip. But then things deteriorated further on Nov. 2 when it fell to its 52W low at 4,100 kip. All the technical indicators then, plus the industry folklore, said “buy on the low”.
Adding appeal was the fact that a dividend was due shortly for the July 01 to Dec 31 half year. The lower price and fall from grace in lower volumes caused the proposed “Rights Issue” to be postponed. Technical indicator blips started to kick in on charts from Jan 5 when the stock was at 4,100 kip. Within a few days, strong accumulate more stock signals emerged (things could only improve).
There was a big downturn late January for the Lunar New Year holidays when investors lost interest in trades. Contrary to the market sentiment all the company reports for 2011-12 were positive, particularly from Bloomberg's website. Reports filtered that they and brokers valued the stock above or near 10,000 kip and even “Fundamantals “ applied said EDL-Gen's share price was well below its intrinsic value.
Towards the end of February the stock price for both EDL-Gen and BCEL moved up throught the 90 day exponential moving average (EMA), something that had been missing for two quarters.
Two brokers' analysis reports (one in Dec and another earlier this year) glowingly had an enticing valuation projection with a strike price for EDL-Gen just above US$1.
Summary: EDL-Gen listed on Jan 11, 2011, at 4,500 kip, then peaked at 8,800 kip on Feb 2 and recorded a 52W low of just 4,100 kip. March has seen very strong support for EDL-Gen and compared to its 52W low revisited Jan. 5 the stock has turned that price around with a 24.39 percentage gain as at yesterday's close. This week's 400 kip gain of 8½ percent says the stock represents great value, when comparing the Bloomberg and brokers' evaluations. Friday's closing charts demonstrate this week's very bullish market rally for EDL-Gen and it's far from finished. Both stocks “blue chip” EDL-Gen and BCEL have great appeal but for different reasons.